#1Fiscal Third Quarter 2023 Financial Results Western Digital May 8, 2023 Western Digital.#22 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Forward Looking Statements SAFE HARBOR This presentation contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for the company's business outlook and financial performance for the fiscal fourth quarter of 2023; product ramps; product momentum and performance; the impact of cost reductions; demand trends; and capital expenditure and allocation priorities. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Key risks and uncertainties include volatility in global economic conditions; future responses to and effects of the COVID-19 pandemic or other similar global health crises; impact of business and market conditions; the outcome and impact of our ongoing strategic review, including with respect to customer and supplier relationships, regulatory and contractual restrictions, stock price volatility and the diversion of management's attention from ongoing business operations and opportunities; impact of competitive products and pricing; our development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and our strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; our level of debt and other financial obligations; changes to our relationships with key customers; compromise, damage or interruption from cybersecurity incidents or other data system security risks; actions by competitors; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and other risks and uncertainties listed in the company's filings with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at www.sec.gov, including our Form 10-K filed with the SEC on August 25, 2022, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements to reflect new information or events, except as required by law. This presentation also contains preliminary financial results for the company's fiscal third quarter ended March 31, 2023. These preliminary financial results represent the most current information available to management. The company's actual results when disclosed in its Form 10-Q for the period ended March 31, 2023 may differ from these preliminary results as a result of the completion of the company's financial closing procedures; final adjustments; completion of the review by the company's independent registered accounting firm; and other developments that may arise between now and disclosure of the final results. This presentation includes references to Non-GAAP financial measures. Reconciliations of the differences between the Non-GAAP measures provided in this presentation to the comparable GAAP financial measures are included in the appendix and in the Investor Relations section of our website. We have not fully reconciled our Non-GAAP financial measure guidance to the most directly comparable GAAP measures because material items that impact these measures are not in our control and/or cannot be reasonably predicted. Accordingly, a full reconciliation of the Non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.#33 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Fiscal Third Quarter Executive Summary 1. Financial Results¹ . Revenue of $ 2.8B · Non-GAAP EPS of $ (1.37) · Non-GAAP gross margin of 11% Corporate . Flash Hard Drive . • Operating cash flow of $ (381)M • Free cash flow of $ (527)M • Cash and cash equivalents of $ 2.2B Continued successful ramp of a series of industry-leading storage products and commercialized innovative technologies, while concurrently right-sizing our cost structure, have positioned Western Digital favorably for the future as demand gradually returns to normal levels. Saw signs of demand stabilizing across various end markets. • Continued to see signs of content increase per unit in retail flash, led by WD_BLACK SSD optimized for gaming, as well as Mobile, PC OEMs, and Channel within Client. Announced BiCS8, a groundbreaking technology based on Circuit Bonded to Array architecture, which provides several benefits including reduced cycle time, faster yield ramp, better lateral scaling and industry leading I/O performance. . 22-terabyte CMR drive became the highest volume product among our 20-terabyte and above capacity points. • Delivered gross margin upside and profitable market share gain. See Appendix for GAAP to non-GAAP Reconciliations.#4Revenue Trends by End Market In billions $ 2.4 Cloud $ 2.0 $ 1.6 $ 1.2 $ 0.8 $ 0.4 $ - Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Revenue $ 1.2 billion Decreased 2% QoQ Decreased 32% YoY © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Client Consumer In billions In billions $ 2.4 $ 2.4 $ 2.0 $ 2.0 $ 1.6 $ 1.6 $ 1.2 $ 1.2 $ 0.8 $ 0.8 $ 0.4 $ 0.4 $ - $ - Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Revenue $ 1.0 billion Decreased 10% QoQ Decreased 44% YoY Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Revenue $ 0.6 billion Decreased 22% QoQ Decreased 29% YoY#55 Flash and Hard Drive Metrics Flash Revenue and Gross Margin © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Hard Drive Revenue and Gross Margin In billions In billions $ 2.8 40% $ 2.8 40% $ 2.4 $ 2.4 30% 30% $ 2.0 $ 2.0 $ 1.6 $ 1.2 $ 0.8 $ 0.4 $ - TH 20% $ 1.6 20% $ 1.2 10% $ 0.8 10% 0% $ 0.4 -10% $ - 0% Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Revenue Gross Margin (%) Revenue -Gross Margin (%) Flash Q3F23 Results Bit shipments: decreased 14% QoQ ASP/Gigabyte: Blended: decreased 10% QoQ Like-for-like: decreased 12% QoQ See Appendix for Supplemental Operating Segment Results. Hard Drive Q3F23 Exabyte shipments: increased 15% QoQ Results ASP per drive: $ 109#6Non-GAAP Financial Results ($ in millions, except for EPS) © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Q3F22 Q2F23 Q3F23 QoQ YOY Revenue $ 4,381 $ 3,107 $ 2,803 down 10% down 36% Gross Margin % 31.7% 17.4% 10.6% down 6.8 ppt down 21.1 ppt Operating Expenses $ 740 $ 659 $ 602 down 9% down 19% Operating Income (Loss) $ 650 $ (119) $ (304) * Interest and Other Expense, net $ 64 $ 64 $ 63 down 2% down 2% EPS - Diluted $ 1.65 $ (0.42) $ (1.37) * * Operating Cash Flow $ 398 $ 35 $ (381) * * Free Cash Flow $ 148 $ (240) $ (527) * * See Appendix for GAAP to Non-GAAP Reconciliations. * Not a meaningful figure#77 Cash Flow Walk In millions $ 1,871 $ (381) $ (146) © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED $ 882 $2,220 $ (6) (1) (2) Q2F23 Cash & Cash Equivalents Operating Cash Cash CapEx Flow Convertible Preferred Equity Other Q3F23 Cash & Cash Equivalents Total liquidity was $5.3 billion, including cash and cash equivalents of $ 2.2 billion, undrawn revolver capacity of $2.25 billion and unused delayed draw term-loan facility of $ 875 million. 1. Cash Capital Expenditures includes purchases of property, plant and equipment, net, and notes receivable issuances to Flash Ventures, net. 2. Other primarily consists of employee stock plans, net and strategic investments and other, net.#88 Fiscal Fourth Quarter Guidance (1) GAAP Revenue ($ B) Gross Margin % Operating Expenses ($M) Interest and Other Expense, net ($ M) Income Tax Expense ($M) (3) EPS - Diluted Share Count - Diluted (in millions) 1. Guidance as shown is as of May 8, 2023. © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Non-GAAP(2) $2.40 $2.60 $2.40 $2.60 2.4% -4.4% 3.0% - 5.0% $ 730 - $750 $ 580 - $ 600 ~$ 90 N/A ~$ 90 $60 - $70 N/A - $ (2.20) $ (1.90) ~321 ~321 2. 3. Non-GAAP gross margin guidance excludes stock-based compensation expense of approximately $ 10 million to $ 15 million. The company's Non-GAAP operating expenses guidance excludes amortization of acquired intangible assets, stock-based compensation expense, employee termination, asset impairment and other charges, and expenses related to strategic review, totaling approximately $ 140 million to $ 160 million. In the aggregate, Non-GAAP diluted earnings per share guidance excludes these items totaling $ 150 million to $ 175 million. The timing and amount of these charges excluded from Non-GAAP gross margin, Non-GAAP operating expenses, and Non-GAAP diluted earnings per share cannot be further allocated or quantified with certainty. Additionally, the timing and amount of additional charges the company excludes from its Non-GAAP income tax expense and Non-GAAP diluted earnings per share are dependent on the timing and determination of certain actions and cannot be reasonably predicted. Accordingly, full reconciliations of Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP income tax expense and Non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (GAAP gross profit, GAAP Operating expenses, income tax expense and diluted earnings per share, respectively) are not available without unreasonable effort. The Non-GAAP income tax expense is determined based on a percentage of Non-GAAP pre-tax income or loss. Our estimated Non-GAAP tax dollars may differ from our GAAP tax dollars (i) due to differences in the tax treatment of items excluded from our Non-GAAP net income; (ii) the fact that our GAAP income tax expense or benefit recorded in any interim period is based on an estimated forecasted GAAP tax rate for the full year, excluding loss jurisdictions; and (iii) because our GAAP taxes recorded in any interim period are dependent on the timing and determination of certain GAAP operating expenses.#99 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Joint Venture Operational Framework For more information on Flash Ventures, please visit investor.wdc.com for a recently published Flash Ventures presentation. Western Digital. Co-develops flash (including process technology and memory design) with Kioxia and contributes IP for Flash Ventures' use Performs integral manufacturing and R&D functions at Flash Ventures' manufacturing sites Purchases Flash Ventures' wafers at cost plus a small markup Pays Flash Ventures' expenses (including equipment depreciation and lease expense) Funds Flash Ventures' equipment purchases (via loans, equity and lease guarantees) in excess of Flash Ventures' operating cash flow Flash Ventures 49.9% Owned by Western Digital 50.1% Owned by Kioxia Owns and leases equipment for flash wafer production and R&D line Purchases wafers from Kioxia at cost under foundry agreements Sells wafers to Western Digital and Kioxia at cost plus a small markup Charges expenses to Western Digital and Kioxia (including equipment depreciation and lease expense) Borrows from Western Digital and Kioxia for a portion of their equipment purchases Repays loans for equipment purchases using excess operating cash flow KIOXIA Co-develops flash (including process technology and memory design) with Western Digital and contributes IP for Flash Ventures' use Performs integral manufacturing and R&D functions at Flash Ventures' manufacturing sites Purchases Flash Ventures' wafers at cost plus a small markup Pays Flash Ventures' expenses (including equipment depreciation and lease expense) Funds Flash Ventures' equipment purchases (via loans, equity, and lease guarantees) in excess of Flash Ventures' operating cash flow Owns and operates cleanrooms Provides wafer manufacturing services to Flash Ventures at cost#1010 Capital Expenditure Framework Cash Capital Expenditures (1) Flash Ventures Capital Expenditures Gross Capital Expenditures 1 2 Flash HDD CapEx Non-Fab CapEx 3 Flash Ventures Parent Loans (2) © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED 3 Flash Ventures Parent Loans (2) + 4 Flash Ventures Lease Financing(2) 2 3 HDD CapEx + Flash Non-Fab CapEx Flash Ventures Parent Loans (2) 1. Cash Capital Expenditures includes purchases of property, plant and equipment, net, and notes receivable issuances to Flash Ventures, net. 2. 3. Flash Ventures Parent Loans, Flash Ventures Lease Financing, and Flash Ventures Net Operating Cash Flow are comprised only of Western Digital's portions. Flash Ventures Net Operating Cash Flow is primarily generated from equipment depreciation payments. 4 Flash Ventures Lease Financing (2) 5 5 Flash Ventures Net Operating Cash Flow (2)(3) Flash Ventures Net Operating Cash Flow (2)(3)#1111 Gross Capital Expenditure Trends In billions $ 3.5 $ 3.0 $2.5 $ 1.6 $ 2.0 $ 1.0 $ 1.5 $ 1.0 $ 2.0 $ 1.6 $ 1.4 $ 0.5 $ - $(0.5) FY18 Cash CapEx (2) FY19 $ (0.3) FY20 $ 1.5 $ 1.9 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED $ 1.2 $ 0.8 ~$ 0.8 FY21 FY22 FY23F (1) WD portion of: Flash Ventures Cash Flow + Flash Ventures Lease Financing (3) 1. FY23F: Gross Capital Expenditures of ~$ 2.2 billion, of which Cash Capital Expenditures ~$ 0.8 billion. 2. Cash Capital Expenditures includes purchases of property, plant and equipment, net, and notes receivable issuances to Flash Ventures, net. 3. Flash Ventures Net Operating Cash Flow and Flash Ventures Lease Financing are comprised only of Western Digital's portions.#1212 Capital Allocation Framework © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Highest Priority Reinvestment in the Company Strategically reinvest to drive innovation Reduce Leverage Shareholder Return Dividend Program Target 1.0x 3.25x Debt-to-EBITDA - Share Repurchases Committed to returning excess cash to shareholders#1313 Appendix © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED#1414 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED $ 2,243 2,138 $ 4,381 36% 28% Quarterly Fact Sheet In millions, except Average Selling Price (ASP), percentages, and working capital related metrics Revenue by End Market(1) Cloud Client Consumer Total Revenue Segment Results Flash Revenue HDD Revenue Total Revenue Flash Gross Margin HDD Gross Margin Q3F22 $ 1,774 1,732 875 $ 4,381 Q4F22 $ 2,098 1,637 793 $ 4,528 Q1F23 $ 1,829 1,229 678 $ 3,736 Q2F23 $ 1,224 1,089 $3,107 $1,657 Q3F23 $ 1,205 975 794 623 $ 2,803 $ 2,400 $ 1,722 2,128 2,014 1,450 $ 1,307 1,496 $ 4,528 $ 3,736 $ 3,107 $ 2,803 36% 25% 15% (5%) 28% 29% 21% 24% Total Gross Margin for Segments (2) Exabyte Metrics 32% 32% 27% 17% 11% QoQ Change in Flash Exabytes Sold (3) (14%) 6% (10%) 20% (14%) QoQ Change in HDD Exabytes Sold (3) 1% 1% 1% (35%) 15% QoQ Change in Total Exabytes Sold (3) Flash Metrics (2%) 2% ―% (28%) 9% QoQ Change in ASP/Gigabytes (3) (1%) 2% (22%) (20%) (10%) HDD Metrics Cloud Units Client Units Consumer Units Total HDD Units (4) HDD ASP(5) Cash and Cash Equivalents Cash Flows 9.7 9.3 8.6 5.5 6.3 5.7 3.9 3.4 4.0 3.6 4.4 3.3 2.7 3.4 2.7 19.8 16.5 14.7 12.9 12.6 $ 101 $ 120 $ 125 $ 99 $ 109 $ 2,505 Cash Flows provided by Operating Activities Activity Related to Flash Ventures, net Purchases of Property, Plant and Equipment, net $ 398 (290) $ 2,327 $ 295 $ 2,049 $ 1,871 (278) 40 (114) $6 (320) 99 $ 35 (258) (17) $ 2,220 $ (381) (110) (36) Free Cash Flow (6) Working Capital Related Days Sales Outstanding Days Inventory Outstanding Days Payables Outstanding Cash Conversion Cycle $ 148 $ (97) $ (215) $ (240) $ (527) 49 56 59 56 104 107 128 133 52 144 (63) (66) (65) (55) (57) 90 97 122 134 139#1515 Quarterly Fact Sheet (continued) FOOTNOTES © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED FORMULAS Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / # of days in quarter) Days Inventory Outstanding (DIO) = Inventories / (Cost of Revenue / # of days in quarter) Days Payables Outstanding (DPO) = Accounts Payable (including Accounts Payable to Related Parties) / (Cost of Revenue / # of days in quarter) Cash Conversion Cycle = DSO + DIO - DPO FOOTNOTES 1. Cloud is primarily comprised of products sold for public or private cloud environments and enterprise customers. Client is primarily comprised of products sold directly to OEMS or via distribution. Consumer is primarily comprised of retail and other end-user products. 2. Total gross margin for segments is a Non-GAAP financial measure, which is also referred to herein as Non-GAAP gross margin. See Appendix for GAAP to Non-GAAP Reconciliations and Supplemental Operating Segment Results for further details. Excludes licensing, royalties, and non-memory products. 3. 4. HDD Unit volume excludes data storage systems and components. 5. 6. HDD ASP is calculated by dividing HDD revenue by HDD units. Data storage systems are excluded from this calculation, as data storage systems ASP is measured on a per system basis rather than a per drive basis. Free cash flow is defined as cash flows provided by operating activities less purchases of property, plant and equipment, net, and the activity related to Flash Ventures, net. The company considers free cash flow generated in any period to be a useful indicator of cash that is available for strategic opportunities including, among others, investing in the company's business, making strategic acquisitions, repaying debt and strengthening the balance sheet.#1616 Debt Capital Structure Current Cap Table © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Debt Maturity Profile (in billions) Rate All-in Rate¹ Maturity As of March 31, 2023 (in millions) $ 4.0 Over 80% of debt to mature in 2026 or later $ 3.0 Delayed Draw Term Loan² S+2.00%6 6.81% Convertible Debt Due 20243 1.50% 1.50% TBD2 2/1/2024 $ 0 $ 2.5 $ 2.2 1,100 $ 2.0 Sr. Unsecured Notes Due 20264 4.75% 4.75% 2/15/2026 2,300 $ 1.2 $2.25B Revolver5 S+1.375%6 6.28% 1/7/20277 $ 1.0 $ 0.5 $ 0.5 Term Loan A-2 S+1.375%6 6.28% 1/7/20277 2,700 $ 0.2 Sr. Unsecured Notes Due 20298 Sr. Unsecured Notes Due 20328 Total Debt 2.85% 3.10% 2.85% 3.10% 4.579%⁹ 2/1/2029 2/1/2032 500 $ 0.0 T 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 500 Term Loan A-2 Sr. Unsecured Notes Convertible Notes $ 7,100 1. All-in applicable rates as of March 31, 2023. 2. 3. Delayed draw term loan facility of $ 875 million can be drawn anytime prior to June 30, 2023. The amount drawn will bear interest at either Adjusted Term SOFR plus an applicable margin from 1.750% to 2.625% or a base rate plus an applicable margin from 0.750% to 1.625%, depending on the company's corporate family ratings. The amount borrowed will mature 364 days following the date of the initial draw. However, the due date will be accelerated to November 2, 2023 if conditions for acceleration of amounts due under the Term Loan A-2 and Revolver noted in footnote 7 below have been triggered. Initial conversion price of $121.91 per share. Notes became callable on February 5, 2021. 4. Notes are callable beginning November 15, 2025. 3456N 5. 6. 7. 8. 9. တတ Revolver capacity: $ 2.25 billion, none of which was drawn as of March 31, 2023. S = Adjusted Term SOFR. Delayed Draw Term Loan, Term Loan A-2, and Revolver have a SOFR floor of 0 bps and Applicable spread for Term Loan A-2 and Revolver over SOFR plus 0.10% based on credit ratings as of March 31, 2023. Revolver and Term A-2 will become due on November 2, 2023 if, as of that date, the company does not have Cash and cash equivalents plus available unused capacity under its credit facilities that exceed by $ 1 billion the sum of the outstanding balance of the 1.50% convertible notes due 2024 plus the outstanding principal amount of any other debt maturing within 12 months. Sr. Unsecured Notes Due 2029 are callable beginning December 1, 2028 and Sr. Unsecured Notes Due 2032 are callable beginning November 1, 2031. Weighted average interest rate is based on principal balances outstanding as of March 31, 2023.#1717 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Net Income (Loss) Income tax expense Q3F22 $ 1,821 Q4F22 Q2F23 Interest and other expense, net Depreciation and amortization EBITDA(1) Stock-based compensation expense Contamination related charges Employee termination, asset impairment and other charges Strategic review Recoveries from a power outage incident Other Adjusted EBITDA(2)(3) Total Debt(4) Debt to Adjusted EBITDA Flash Ventures equipment depreciation expenses Other Credit Agreement Adjustments (5) Credit Agreement Defined Adjusted EBITDA (6) Total Debt(4) Credit Agreement Defined Leverage Ratio (7) Q1F23 $ 1,500 $ 917 $ (93) Q3F23 $ (690) 387 623 586 565 371 296 268 268 251 246 959 929 895 867 864 $ 3,463 $ 3,320 $ 2,666 $ 1,590 $ 791 $ 328 203 20 $ 326 207 43 $ 336 $ 335 $ 323 207 207 4 49 123 159 ― ― ― 195 15 (7) 7 $ 4,014 $ 7,250 1.8X $ 990 2 $ 5,006 $ 7,250 1.4X (7) $ 3,894 $ 7,100 1.8X $ 929 11 $ 4,834 $ 7,100 1.5X (7) $ 3,254 $ 7,100 2.2X $ 858 2 $ 4,114 $ 7,100 1.7X (7) 2 $ 2,250 $ 7,100 3.2X $ 786 1 $ 1,293 $ 7,100 5.5X 292 $730 504 $ 2,527 $ 7,100 2.1X $ 7,100 2.8X $ 3,328 1. 2. 3. EBITDA is defined as net income before income tax expense, interest and other expense, net, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA (as defined above), adjusted to exclude certain expenses, gains and losses that the company believes are not indicative of its core operating results or because these exclusions are consistent with the financial models and estimates published by many analysts who follow the company and its peers. See the GAAP to Non-GAAP reconciliation slides within the Appendix for further details. Adjusted EBITDA is not intended to reflect measures used under the company's debt agreements. 345 4. Total Debt is the total principal balance of debt outstanding as of the end of the applicable trailing 12-month period. 5. 19 Other Credit Agreement Adjustments includes deductions and addbacks for other income, expenses, and special charges, including underutilization charges and expected future cost savings from cost reduction initiatives in each case as provided under the company's credit agreement applicable to Term Loan A-2 and Revolver. Credit Agreement Defined Adjusted EBITDA is used to measure financial covenant compliance under the company's credit agreement applicable to Term Loan A-2 and Revolver. Credit Agreement Defined Leverage Ratio is calculated as Total Debt divided by Credit Agreement Defined Adjusted EBITDA and is the Leverage Ratio as defined in the company's credit agreement for purpose of the financial covenant applicable to Term Loan A-2 and Revolver.#1818 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations In millions; unaudited GAAP Gross Profit Stock-based compensation expense Contamination related charges Recoveries from a power outage incident Non-GAAP Gross Profit ༠༠༤༤༧ GAAP Operating Expenses Stock-based compensation expense Amortization of acquired intangible assets Employee termination, asset impairment and other charges Strategic review Other Non-GAAP Operating Expenses GAAP Operating Income (loss) Cost of revenue adjustments Operating expense adjustments Non-GAAP Operating Income (loss) ༠༠༣ ༩ GAAP Interest and Other Expense, Net Non-cash economic interest and Other Non-GAAP Interest and Other Expense, Net Q3F22 $ 1,181 13 203 Q2F23 $ 528 12 Q3F23 $286 12 (7) $ 1,390 $ 540 $ 298 $ 857 $ 849 $ 758 (73) (74) (62) (39) (39) (39) (4) (76) (40) (15) (1) (1) $ 740 $ 659 $ 602 $ 324 209 $ (321) 12 $ (472) 12 117 190 $ 650 $ (119) 156 $ (304) $ (62) $ (64) $ (57) (2) (6) $ (64) $ (64) $ (63)#1919 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations (cont'd) In millions, except per share amounts; unaudited GAAP Net Income (loss) Stock-based compensation expense Amortization of acquired intangible assets Q2F23 Q3F23 $ (572) Q3F22 $ 25 86 $ (446) 86 39 39 74 39 203 (7) 4 76 40 15 (6) (17) (427) 9 Contamination related charges Recoveries from a power outage incident Employee termination, asset impairment and other charges Strategic review Non-cash economic interest and Other Income tax adjustments (1) 1 172 521 109 (135) Non-GAAP Net Income (loss) Less: cumulative dividends allocated to preferred shareholders Non-GAAP Net Income (loss) attributable to common shareholders $ 521 $ (135) $ (436) Diluted Income (loss) Per Common Share $ 0.08 $ (1.40) $ (1.82) $ 1.65 $ (0.42) $ (1.37) ་ ་ ་ བ་ ་་ GAAP Non-GAAP Diluted Weighted Average Shares Outstanding GAAP Non-GAAP 316 316 318 318 319 319#2020 20 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Net Revenue Flash HDD Total Net Revenue Gross Profit By Segment Flash HDD Total Gross Profit for Segments Unallocated corporate items: Stock-based compensation expense Amortization of acquired intangible assets Contamination related charges Total unallocated corporate items Consolidated Gross Profit Gross Margin Supplemental Operating Segment Results Q3F22 Q4F22 Q1F23 Q2F23 In millions, except percentages; unaudited $ 2,243 2,138 $ 2,400 2,128 $ 4,381 $ 4,528 $ 1,722 2,014 $ 3,736 $ 3,107 $1,657 1,450 Q3F23 $ 1,307 1,496 $ 2,803 $ 798 592 $ 1,390 $ 862 $ 422 $ 240 600 574 $ 1,462 $ 996 $ 540 (13) (203) Ê* (12) (14) (1) 三 (12) 300 $ (65) 363 $ 298 (12) (1) (4) Recoveries from a power outage incident 7 (209) (17) (15) (12) (12) $ 1,181 $ 1,445 $ 981 $ 528 $ 286 Flash(1) HDD(2) Total gross margin for segments (3) Consolidated total (4) 35.6% 35.9% 24.5% 14.5% (5.0%) 27.7% 28.2% 28.5% 20.7% 24.3% 31.7% 32.3% 26.7% 17.4% 10.6% 27.0% 31.9% 26.3% 17.0% 10.2% Note: In the table above, Total gross profit for segments and Total gross margin for segments are Non-GAAP financial measures, which are also referred to herein as Non-GAAP gross profit and Non-GAAP gross margin, respectively. 1. Flash gross margin is calculated by dividing Flash gross profit by Flash revenue. 2. HDD gross margin is calculated by dividing HDD gross profit by HDD revenue. 3. Total gross margin for segments is calculated by dividing total gross profit for segments by total revenue. 4. Consolidated total gross margin is calculated by dividing consolidated gross profit by total revenue.#2121 21 © 2023 WESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations FOOTNOTES This presentation contains the following financial measures that are not in accordance with U.S. generally accepted accounting principles ("GAAP"): Non-GAAP gross profit; Non-GAAP gross margin; Non-GAAP operating expenses; Non-GAAP operating income and loss; Non-GAAP interest and other expense, net; Non-GAAP net income and loss; Non-GAAP diluted income and loss per common share; Adjusted EBITDA; Credit Agreement Defined Adjusted EBITDA; and free cash flow ("Non-GAAP measures"). These Non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with GAAP and may be different from Non-GAAP measures used by other companies. The company believes the presentation of these Non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors for measuring the company's earnings performance and comparing it against prior periods. Specifically, the company believes these Non-GAAP measures provide useful information to both management and investors as they exclude certain expenses, gains and losses that the company believes are not indicative of its core operating results or because they are consistent with the financial models and estimates published by many analysts who follow the company and its peers. As discussed further below, these Non-GAAP measures exclude, as applicable, stock-based compensation expense, amortization of acquired intangible assets, contamination related charges, recoveries from a power outage incident, employee termination, asset impairment and other charges, expense related to our strategic review, non-cash economic interest, other adjustments, and income tax adjustments, and the company believes these measures along with the related reconciliations to the GAAP measures provide additional detail and comparability for assessing the company's results. EBITDA and adjusted EBITDA are not intended to reflect measures used under the company's debt agreements. Credit Agreement Defined Adjusted EBITDA also is used to measure financial covenant compliance as defined under the company's credit agreement applicable to Term Loan A-2 and Revolver and the company's credit agreement applicable to the Delayed Draw Term Loan. These Non-GAAP measures are some of the primary indicators management uses for assessing the company's performance and planning and forecasting future periods. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. As described above, the company excludes the following items from its Non-GAAP measures: Stock-based compensation expense. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, the subjective assumptions involved in those determinations, and the volatility in valuations that can be driven by market conditions outside the company's control, the company believes excluding stock-based compensation expense enhances the ability of management and investors to understand and assess the underlying performance of its business over time and compare it against the company's peers, a majority of whom also exclude stock-based compensation from their Non-GAAP results. Amortization of acquired intangible assets. The company incurs expenses from the amortization of acquired intangible assets over their economic lives. Such charges are significantly impacted by the timing and magnitude of the company's acquisitions and any related impairment charges. Contamination related charges. In February 2022, a contamination of certain materials used in the company's manufacturing process occurred and affected production operations at the flash-based memory manufacturing facilities in Yokkaichi and Kitakami, Japan, which are operated through the company's joint business ventures with Kioxia Corporation (collectively, "Flash Ventures"). The contamination resulted in scrapped inventory and rework costs, decontamination and other costs needed to restore the facilities to normal capacity, and under absorption of overhead costs which are expensed as incurred. These charges are inconsistent in amount and frequency, and the company believes these charges are not part of the ongoing production operation of its business Recoveries from power outage incident. In June 2019, an unexpected power outage incident occurred at the flash-based memory manufacturing facilities operated through the company's joint venture with Kioxia Corporation in Yokkaichi, Japan. The power outage incident resulted in costs associated with the repair of damaged tools and the write-off of damaged inventory and unabsorbed manufacturing overhead costs which are expensed as incurred. During fiscal years 2021 and 2022, the company received recoveries for these losses from other parties. The recoveries are inconsistent in amount and frequency, and the company believes they are not part of the ongoing production operation of its business. Employee termination, asset impairment and other charges. From time-to-time, in order to realign the company's operations with anticipated market demand or to achieve cost synergies from the integration of acquisitions, the company may terminate employees and/or restructure its operations. From time-to-time, the company may also incur charges from the impairment of intangible assets and other long-lived assets. In addition, the company may record credits related to gains upon sale of property due to restructuring or reversals of charges recorded in prior periods. These charges or credits are inconsistent in amount and frequency, and the company believes they are not indicative of the underlying performance of its business. Strategic review. The Company incurred expenses associated with its ongoing review of potential strategic alternatives aimed at further optimizing the long-term value for stockholders. The company believes these charges do not reflect the company's operating results and that they are not indicative of the underlying performance of its business. Non-cash economic interest. The company has excluded non-cash economic interest expense associated with its convertible notes recognized in periods prior to the company's adoption of the Financial Accounting Standards Board Accounting Standards Update No. 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity", which the company adopted at the beginning of its fiscal year ending June 30, 2023. The exclusion of such amounts from prior periods facilitates a comparison of the company's prior period results to the current period presentation. Other adjustments. From time-to-time, the company incurs charges or gains that the company believes are not a part of the ongoing operation of its business. The resulting expense or benefit is inconsistent in amount and frequency. Income tax adjustments. Income tax adjustments include the difference between income taxes based on a forecasted annual Non-GAAP tax rate and a forecasted annual GAAP tax rate as a result of the timing of certain Non-GAAP pre-tax adjustments. The income tax adjustments also include adjustments to estimates related to the current status of the rules and regulations governing the transition to the Tax Cuts and Jobs Act and the re-measurement of certain unrecognized tax benefits primarily related to tax positions taken in prior quarters, including interest. These adjustments are excluded because the company believes that they are not indicative of the underlying performance of its ongoing business. Additionally, free cash flow is defined as cash flows provided by operating activities less purchases of property, plant and equipment, net, and the activity related to Flash Ventures, net. The company considers free cash flow generated in any period to be a useful indicator of cash that is available for strategic opportunities including, among others, investing in the company's business, making strategic acquisitions, repaying debt and strengthening the balance sheet.#22TM Western Digital Create What's Next